Predicting what happens with the economy is tricky business, almost as complex and certainly as fraught with sudden changes as predicting the weather (particularly here in New England). That’s why it’s always interesting to see how a pair of economists see what lies ahead for AV integrators.
Todd Buchholz talked about how many unexpected things have happened around the world in the past year or so that are having major effects on the global economy, such as the election of Donald Trump as U.S. president in 2016 and the support of Brexit in 2017.
Both of those unexpected results, Buchholz told PSNI Supersummit attendees in Houston earlier this month, came about because “people lied to the pollsters.” That’s why it’s dangerous, he says, to rely on polls when trying to figure out where our economy is headed in 2018 and beyond.
Chris Kuehl told attendees at the NSCA Business & Leadership Conference in Dallas that there are a lot of economic elements “in transition,” but added the caveat, “we’re not really sure what we’re transitioning to or what we’re transitioning from.”
Kuehl notes that AV integrators and business leaders are “becoming more protective of the people they like,” a move that’s making it tougher than ever for everyone in the AV space to find up-and-coming talent to add to their companies, although it’s not stopping them when they spot someone they want.
“The most common way for people to hire these days is to poach,” says Kuehl. Unemployment sits at about 4.1 for the U.S., but it’s about 10 percent in Nevada and about 1.6 percent in North Dakota, so “you have to look at the regional numbers” to understand what’s going on, he says.
Longer Lives Mean Fewer Early Exits for AV Integrators
With life expectancy up to 80 these days, “there’s a lot of anxiety” about financial welfare these days, says Buchholz.
“When countries become wealthier, people live longer,” he says. “That has an effect on the health care system and in other ways too.” Buchholz notes there are now more golf courses in the U.S. than McDonald’s restaurants and more adult diapers than baby diapers sold in Japan.
President Franklin Delano Roosevelt set 65 as the age when Americans could collect Social Security checks because people didn’t live that long at the time. The same was true when President Lyndon Baines Johnson approved the launch of Medicare.
That’s led to what Buchholz calls “a divisive period in history.” While globalization brings cheaper goods, the flurry of mergers and acquisitions adds efficiency to the AV industry but costs people their jobs in most cases.
“The world economy is stitched together,” says Buchholz. “It’s hard to predict how it’ll come unstitched.”
Kuehl sees the same turmoil, but says there’s no easy solution.
“If we overstimulate the economy, you’ll have a lot of companies that will expand whether they want to or not,” he says. “The assumption is consumers will respond. We essentially create our own demand.”
The U.S. economy must grow 3.5 to 4.5 percent every year to cut into the deficit, says Kuehl. A look around the globe shows that no countries are growing particularly quickly, but many of the top players are all growing, he says.
Be Ready for Next Economy Disruption
One problem with looking ahead, says Kuehl, is how long it takes to get accurate information about what’s already happened.
“In February 2019, we’ll know definitively what happened in December 2017, which puts you on the cutting edge of strategic planning,” he says with his tongue firmly in his cheek. The good news is “you can tell if a company is hiring or firing by how much toilet paper they buy.” That’s also a good indicator of the composition of the staff between men and women, says Kuehl.
The so-called gig economy—with companies such as AirBNB and Uber—has “added a shock to the economic supply side,” says Buchholz. Americans are buying houses, cars and phones, but aren’t going to restaurants as much as they did before, he says. Still, the small business sector is confident our economy will prosper.
That’s evidenced by people quitting jobs they don’t like, a move that shows confidence they can find something else they do like to replace that work. In good news for those in the AV space, the technology sector “has caught a positive tailwind,” says Buchholz.
That’s evidenced by video game sales topping $30 billion in 2017, compared to about $10 billion for movie tickets.
The labor shortage — familiar to AV integrators — is creating “all sorts of competition” for the most talent workers, giving them plenty of options, particularly in the health care and operations sectors, says Kuehl.
“It’s getting to the point where you start trolling preschools to see who’s adept with an Etch-a-Sketch,” he says with a laugh. What’s interesting is “probably 80 percent of the people in this room are doing something they never thought they’d be doing for a living,” says Kuehl.
People are motivated by three things: price, prestige and the “I didn’t know that existed” factor, says Kuehl. That last concept is something that’s great news for those in the AV world. “This is an industry that’s full of the new and exciting,” he says. “You’re expected to be at the cutting edge of the cutting edge.”
We’re seeing more people engaged in more online shopping than ever, says Kuehl. Millennials, he says, prefer having experiences to collecting stuff. Rising fuel, commodities and labor costs and the shift away from “one-size-fits-all” regulations are other things that could play roles in our immediate and long-term economic future.
There are political motivations to watch in Mexico, Italy, Germany and China, to name a few, says Kuehl, and innovation with online offerings, robotics and autonomous vehicles will become increasingly important. But don’t forget about the changing of the guard from Baby Boomers to Millennials. What happened to Gen Xers anyway?
Inflation, the worldwide trade skirmish and real estate values will go a long way toward telling us which direction the economy is headed, says Buchholz. But do you want to be the best mover or the first mover?
“It’s all about the partnerships and relationships you make with other AV integrators and clients that could be the difference between prospering or not,” says Buchholz.